A two step mortgage is a 30 year mortgage with a few modifications-Convertible or non-convertible. These mortgage loans are also known as 5/25s and 7/23s. The 5/25s has a fixed interest rate for the first five years and then converts to a 25 year fixed mortgage rate or a 1 year adjustable mortgage rate. The 7/23 has a fixed interest rate for the first seven years and then converts to a 23 year fixed or a 1 year adjustable. The starting home loan rate with two step mortgage is lower than a 30-year fixed mortgage, but it is higher than a 1-year ARM mortgage. This type of residential mortgage is less risky than a mortgage ARM initially since the adjustment interval is longer.